Why The Glacial Adoption of the Mobile Wallet?

NEW YORK (MainStreet) — Here is the 2013 point of sale paradox: everybody is talking, loudly, about the digital wallet as a credit card replacement - and yet just about nobody is using those wallets.

Ask yourself, how many times in the past week have you used an old-fashioned credit or debit card? How many times did you use a digital wallet on a smartphone or tablet at point of sale? The answer to the first probably is too many to remember, whereas the second answer probably is none.

That is not where we are supposed to be, six years into the smartphone revolution triggered by the launch of the iPhone.

The questions are why - and when will this change?

“It doesn’t feel we are any nearer to a digital wallet than we were six years ago,” said Jon Squire, CEO of CARDFREE, a San Francisco-based payments innovation company.

“If it’s just about payments there’s no reason to use a digital wallet,” said Mike Love, CTO of Mozido, a cloud-based mobile rewards company in New York.

This is where the digital wallet stalls: “It takes seven seconds to swipe a credit card. Consumers are happy. Merchants are happy,” said Andy O’Dell, a co-founder of Clutch, a Philadelphia-based developer of a digital wallet. “To succeed a wallet has to go beyond the transaction,” that is, the payment itself.

How? A wallet can bring convenience - by loading many loyalty cards and rewards programs into one app, as Apple is doing with its Passbook for instance. But note: Apple very consciously side-stepped transaction capabilities in Passbook, meaning it is built to serve as a digital repository of credential (much as a leather wallet holds plastic cards and other ID). But Passbook cannot currently be used to facilitate a purchase and, probably, that is no great set-back.